Kohli and Jaworski_Market Orientation

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Market Orientation: The Construct, Research Propositions, and Managerial ImplicationsAuthor(s): Ajay K. Kohli and Bernard J. JaworskiSource: Journal of Marketing, Vol. 54, No. 2 (Apr., 1990), pp. 1-18Published by: American Marketing AssociationStable URL: http://www.jstor.org/stable/1251866 .

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Ajay

K.

Kohli

&

Bernard

J.

Jaworski

arket

Orientation:

h e

Construct

esearch

Proposition

a n d

Managerial

mplications

The literature reflects

remarkably

little effort

to

develop

a framework for

understanding

the

implemen-

tation of the

marketing

concept.

The authors

synthesize

extant

knowledge

on

the

subject

and

provide

a

foundation

for future

research

by

clarifying

the

construct's

domain,

developing

research

propositions,

and

constructing

an

integrating

framework

that includes antecedents

and

consequences

of

a market

ori-

entation. They draw on the occasional writings on the subject over the last 35 years in the marketing

literature,

work

in

related

disciplines,

and

62 field

interviews with

managers

in

diverse

functions

and

organizations.

Managerial

implications

of this research

are

discussed.

THOUGH

the

marketing

concept

is

a

cornerstone

of

the

marketing

discipline,

very

little

attention

has

been

given

to

its

implementation.

The

marketing

concept

is

essentially

a

business

philosophy,

an

ideal

or

a

policy

statement

cf.

Barksdaleand

Darden

1971;

McNamara1972). The business philosophy can be

contrastedwith

its

implementation

eflected in

the ac-

tivities and

behaviors of

an

organization.

In

keeping

with

tradition

e.g.,

McCarthy

and

Perreault

1984,

p.

36),

we

use the term

market

rientation

o

mean

the

implementation

of

the

marketing

concept.

Hence,

a

market-oriented

rganization

s

one

whose

actions

are

consistent

with

the

marketing

concept.

In

recent

years,

there

has

been

a

strong

resurgence

of

academic as

well

as

practitioner

nterest n

the

mar-

AjayK.Kohlis Assistantrofessor,epartmentf Marketingdmin-

istration,

he

University

f

Texas

t

Austin.

ernard

.

Jaworskis

As-

sistant

rofessor,

epartment

f

Marketing,

arl ller

Graduate

chool

of

Management,

niversity

f

Arizona. he

authors

hank

Dipankar

Chakravarti,

ohit

eshpande,

onathan

renzen,

ichard

utz,

eborah

Maclnnis,

ent

Nakamoto,

.W.

Park,

.

Rajan

aradarajan,

elanie

Wallendorf,

rederick

ebster,

obert

Westbrook,

erald

altman,

nd

four M

reviewersor

heir

helpful

ommentsn

previous

ersions

f

the

article.

esearch

upport

rovided

y

the

Marketing

cience

nsti-

tute

s

gratefully

cknowledged.

oth

uthors

ontributed

qually

o the

article.

keting

concept

and

its

implementation

e.g.,

Deshpande

and

Webster

1989;

Houston

1986;

Olson

1987;

Webster

1988).

We

seek to

further

that

interest

by

providing

a

foundation or the

systematic

development

of a the-

ory

of

market

orientation.

Given its

widely

acknowl-

edged importance,one might expect the concept to

have a

clear

meaning,

a rich

traditionof

theory

de-

velopment,

and a

related

body

of

empirical

findings.

On

the

contrary,

a

close

examination

of the

literature

reveals a

lack

of

clear

definition,

little

careful

atten-

tion

to

measurement

ssues,

and

virtually

no

empiri-

cally

based

theory.

Further,

the

literature

pays

little

attention

to

the

contextual

factors that

may

make

a

market

orientation

either

more or

less

appropriate

or

a

particular

business.

The

purpose

of

this

article is

to

delineate

the

domain of the

market

orientation

con-

struct,

provide

an

operational

definition,

develop

a

propositional nventory, and constructa comprehen-

sive

framework or

directing

future

research.

We

first

describe

our method.

Essentially,

we

draw

on

the

literature n

marketing

and

related

disciplines,

and

supplement

t

with

findings

fromfield

interviews

with

managers

n

diverse

functions,

hierarchical

ev-

els,

and

organizations.

Our

discovery-oriented

ap-

proach

(cf.

Deshpande

1983;

Mahrer

1988)

is

similar

to

the

qualitative,

practitioner-based

pproach

used

by

Parasuraman,

Zeithaml,

and

Berry

(1985)

and

is de-

Journal

of

Marketing

Vol. 54 (April 1990), 1-18

Market rientation1

This content downloaded from 130.88.99.218 on Tue, 9 Sep 2014 06:12:05 AMAll use subject to JSTOR Terms and Conditions






signed

to

tap

the cause

and effect

maps

of

managers

(see

Zaltman,

LeMasters,

and

Heffring

1982).

We then

compare

and contrast

the

alternative

con-

ceptualizations

in

the

literature

with

the view

that

emerges

from

the field interviews

and

provide

a

syn-

thesis. Next we

develop

a series

of research

propo-

sitions

in

the

spirit

of

propositional

inventories

de-

veloped

in such diverse areas

as sales

management

(cf.

Walker,

Churchill,

and Ford

1977;

Weitz

1981),

organization

of

marketing

activities

(cf.

Ruekert,

Walker,

and

Roering

1985),

diffusion

of

technology

(cf.

Robertson and

Gatignon

1986),

information

pro-

cessing

(cf.

Alba and Hutchinson

1987),

and

market-

ing

control

systems

(cf.

Jaworski

1988).

These

liter-

ature-based

and

field-based

propositions

are

synthesized

in

an

integrative

framework

that

provides

for a

par-

simonious

conceptualization

of the

overarching

fac-

tors

of

interest.

Finally,

we

conclude with a

discus-

sion

that alerts

managers

to

important

issues

involved

in

modifying

business orientations.

Method

Literature

Review

A

review of

the

literature

of

the last 35

years

reveals

relatively

little

attention to the

marketing

concept.

The

limited research

primarily

comprises

(1)

descriptive

work

on

the extent to

which

organizations

have

adopted

the

concept

(e.g.,

Barksdale and

Darden

1971;

Hise

1965; Lusch, Udell,

and

Laczniak

1976;

McNamara

1972),

(2)

essays

extolling

the

virtues of

the

business

philosophy

(e.g.,

Business Week

1950;

McKitterick

1957;

Viebranz

1967), (3)

work

on

the

limits of

the

concept

(e.g.,

Houston

1986;

Levitt

1969;

Tauber

1974),

and

to a lesser

extent

(4)

discussions of

factors

that

facilitate or

hamper

the

implementation

of

the

marketing

concept

(e.g.,

Felton

1959;

Lear

1963;

Webster

1988).

We

draw

on

these

limited

writings,

especially

the last

category,

and

also

on

related

lit-

erature in

the

management

discipline.

Field

Interviews

The

field

research

consisted

of

in-depth

interviews

with

62

managers

in

four

U.S.

cities.

Because

the

purpose

of

the

study

was

theory

construction

(i.e.,

elicitation

of constructs and propositions), it was

important

to

tap

a

wide

range

of

experiences

and

perspectives

in

the

course of

the

data

collection.

Therefore,

a

pur-

posive

or

theoretical

sampling plan

(Glaser

and

Strauss

1967)

was

used

to ensure

that the

sample

in-

cluded

marketing

as

well

as

nonmarketing

managers

in

industrial,

consumer,

and

service

industries.

Care

also

was

taken

to

sample

large

as

well as

small

or-

ganizations.

Of

the 62

individuals

interviewed,

33

held

mar-

keting positions,

15

held

nonmarketing positions,

and

14

held

senior

management

positions.

A

total of

47

organizations

were

included

in

the

sample;

multiple

individuals

were

interviewed in

certain

organizations.

The

organizations

of

18

interviewees

marketed

con-

sumer

products,

those

of 26

marketed

industrial

prod-

ucts,

and

those

of 18

marketed

services. In

size,

the

organizations ranged

from

four

employees

to

several

tens

of

thousands.

The

sample

thus

reflects a

diverse

set of

organizations,

departments,

and

positions,

and

hence

is well

suited for

obtaining

a rich

set

of

ideas

and

insights.

In

addition

to

managers,

10

business

academicians at

two

large

U.S.

universities

were in-

terviewed.

The

purpose

of

these

interviews

was to

tap

insights

that

might

not

emerge

from

the

literature

re-

view

and

the

field

interviews.

A

standard

format

generally

was

followed

for

the

interview.

After a

brief

description

of

the

research

project,

each

interviewee

was

asked

about four

issues

along

the

following

lines.

1.

What

does the

term

market/marketing

orientation

mean to

you?

Whatkinds of

things

does a

market/mar-

keting-oriented

company

do?

2.

What

organizational

factors

foster

or

discourage

this

orientation?

3.

What

are

the

positive

consequences

of

this

orientation?

What are

the

negative

consequences?

4.

Can

you

think

of

business

situations in

which

this

ori-

entation

may

not be

very

important?

These

questions

provided

a

structure

for

each

inter-

view,

but

it

was

frequently

necessary

to

explain

and

clarify

some

of the

questions,

as

well

as

probe

deeper

with

additional

questions

to

elicit

examples,

illustra-

tions,

and other

insights.

The personal interviews

typically

lasted about 45

minutes

and

were

audiotaped

unless

the

interviewee

requested

otherwise.

The

information

obtained

from

these

interviews

affords

novel

insights

into

the

mean-

ing,

causes,

and

consequences

of

a

market

orienta-

tion.

Though

a

large

number of

new

insights

emerged

from

the

study,

we

focus

on

the

more

interesting

ones

(see

Zaltman,

LeMasters,

and

Heffring

1982)

and

those

with the

greatest

potential

for

stimulating

future

research.

Market

Orientation:

The

Construct

Comparing

Literature

and

Field

Perspectives

A

review of

the

literature

reveals

diverse

definitions

of

the

marketing

concept.

Felton

(1959,

p.

55)

defines

the

marketing

concept

as

a

corporate

state

of

mind

that

insists on

the

integration

and

coordination

of all

the

marketing

functions

which,

in

turn,

are

melded

with

all

other

corporate

functions,

for

the

basic

pur-

pose

of

producing

maximum

long-range

corporate

profits.

In

contrast,

McNamara

(1972,

p.

51)

takes

2 / Journalof Marketing,April1990







a broaderview

and defines

the

concept

as

a

philos-

ophy

of

business

management,

based

upon

a

com-

pany-wide

acceptance

of the need

for customer

ori-

entation,

profit

orientation,

and

recognition

of

the

important

ole

of

marketing

n

communicating

he

needs

of

the

market to all

major corporate

departments.

Variants

of these

ideas

are offered

by Lavidge

(1966),

Levitt

(1969),

Konopa

and

Calabro

(1971),

Bell

and

Emory

(1971),

and

Stampfl

(1978).

Three core themes or pillars underlie these ad

hoc

definitions:

(1)

customer

focus,

(2)

coordinated

marketing,

and

(3)

profitability

(cf.

Kotler

1988).

Barksdaleand

Darden

(1971,

p.

36),

point

out,

how-

ever,

that these

idealistic

policy

statements

repre-

sented

by

the

marketing

concept

are of

severely

lim-

ited

practical

alue,

and

assert hat the

major

challenge

is

the

development

of

operational

definitions

for

the

marketing

concept

. . .

(emphasis

added).

Hence,

though

the

literature

sheds

some

light

on

the

philos-

ophy

represented

by

the

marketing

concept,

it

is

un-

clear as to

the

specific

activities

that

translate

he

phi-

losophy into practice, therebyengenderinga market

orientation.

Even

so,

it

appears

reasonable to

con-

clude

from

the

literature

that

a

market-oriented

or-

ganization

s

one in

which the

three

pillars

of

the

mar-

keting

concept

(customer

ocus,

coordinated

marketing,

profitability)

are

operationally

manifest.

The

view

of

market

orientation

hat

emerges

from

the

field

interviews is

consistent

with

the

received

view in

the

literature,

hough

certain

differences

are

evident.

Importantly,

the field

interviews

provide

a

significantly

learer

dea of

the

construct's

domain

and

enable

us

to

offer

a

more

precise

definition.

This

pre-

cision

facilitates

theorydevelopment,constructmea-

surement,

and

eventually

theory

testing.

In

the

fol-

lowing

discussion,

we

first

compare

the

field-based

view

of

market

orientationwith

the

received

view

on

the three

commonly

accepted

pillars-customer

fo-

cus,

coordinated

marketing,

nd

profitability-and

then

elaborate on

the

elements

of

the

field-based

view

of

the

construct.

Customer

ocus.

Without

exception,

the

managers

interviewed

were

consistent in

the

view

that

a

cus-

tomer

focus

is

the

central

element

of

a

market

ori-

entation.

Though

they

agreed

with

the

traditional

iew

thata customerfocus involves

obtaining

information

from

customers

about

their

needs

and

preferences,

several

executives

emphasized

that

it

goes

far

beyond

customer

research.

The

comments

suggest

that

being

customer

oriented

involves

taking

actions

based

on

market

ntelligence,

not

on

verbalized

customer

opin-

ions

alone.

Market

intelligence

is

a

broader

concept

in

that

it

includes

considerationof

(1)

exogenous

mar-

ket

factors

(e.g., competition, regulation)

that

affect

customer

needs

and

preferences

nd

(2)

currentas

well

as

future

needs

of

customers.

These

extensions

do

not

challenge

the

spirit

of

the

first

pillar

(customer

ocus);

rather,

they

reflect

practitioners'

broader,

more

stra-

tegic

concerns

related

to

customers.

Coordinated

marketing.

Few

interviewees

explic-

itly

mentioned

coordinated

marketing

n

the

courseof

the

discussions,

but

the

majority

emphasized

that a

market

orientation

s not

solely

the

responsibility

of

a

marketingdepartment.Moreover, the executives in-

terviewed

emphasized

that it

is

critical

for

a

variety

of

departments

o

be

cognizant

of

customer

needs

(i.e.,

aware

of

market

ntelligence)

and

to

be

responsive

to

those

needs.

Thus,

the

interviewees

stressed

the

im-

portance

of

concerted

action

by

the

various

depart-

ments

of an

organization.

Importantly,

he

field

find-

ings

limit the

domain

of

the

second

pillar

of

market

orientation to

coordination

related

to

market

intelli-

gence.

This

focused

view

of

coordination

s

important

because it

facilitates

operationalizing

he

construct

by

clearly

specifying

the

type

of

coordination

hat is

rel-

evant.

Profitability.

n

sharp

contrasto

the

received

view,

however,

the

idea

that

profitability

s

a

component

of

market

orientation

s

conspicuously

absent

n

the

field

findings.

Without

exception,

interviewees

viewed

profitability

as a

consequence

of

a

market

orientation

rather

han

a

part

of

it.

This

finding

is

consistent

with

Levitt's

(1969,

p.

236)

strong

objection

to

viewing

profitability

as

a

component

of

a

market

orientation,

whichhe

asserts

s

like

saying

that

the

goal

of

human

life

is

eating.

Thus,

the

meaning

of

the

market

orientation

con-

structthat surfacedin the field is essentially a more

precise

and

operational

view

of

the

first

two

pillars

of

the

marketing

concept-customer

focus

and

coordi-

nation.

The

findings

suggest

that

a

market

orientation

entails

(1)

one

or

more

departments

ngaging

in

ac-

tivities

geared

toward

developing

an

understanding

f

customers'

current

and

future

needs

and

the

factors

affecting

hem,

(2)

sharing

of

this

understanding

cross

departments,

and

(3)

the

various

departments

ngag-

ing

in

activities

designed

o

meet

select

customer

needs.

In

other

words,

a

market

orientation

refers

to

the

or-

ganizationwide

generation,

dissemination,

and

re-

sponsiveness

to

market ntelligence.

Further,

though

the

term

marketing

rientation

has

been

used

in

previous

writings,

the

label

market

orientation

appears

to

be

preferable

for

three

rea-

sons.

First,

as

Shapiro 1988)

suggests,

the

latter

abel

clarifies

that

the

construct s

not

exclusively

a

concern

of

the

marketing

unction;

rather,

a

variety

of

depart-

ments

participate

n

generating

market

intelligence,

disseminating

t,

and

taking

actions

in

response

to

it.

Hence

labeling

the

construct

as

marketing

orienta-

tion is

both

restrictive

and

misleading. Second,

the

Market

rientation

3







label market

orientation

is less

politically

charged

in

that it does

not inflate

the

importance

of

the

mar-

keting

function

in an

organization.

The

label

removes

the construct

from

the

province

of the

marketing

de-

partment

and makes

it

the

responsibility

of

all

de-

partments

in an

organization.

Consequently,

the

ori-

entation

is more

likely

to

be

embraced

by

nonmarketing

departments.

Third,

the label

focuses

attention

on

markets

(that

include

customers

and forces

affecting

them),

which

is consistent

with

the broader

manage-

ment of

markets orientation

proposed

by

Park

and

Zaltman

(1987,

p.

7)

for

addressing

limitations

in

cur-

rently

embraced

paradigms.

We next

discuss

in

more

detail

each of the

three

elements of a

market

orien-

tation-intelligence

generation,

dissemination,

and

responsiveness.

Explicating

the

Market

Orientation

Construct

Intelligence

generation.

The

starting

point

of a

market

orientation is

market

intelligence.

Market

intelligence

is a broader concept than customers' verbalized needs

and

preferences

in

that

it

includes

an

analysis

of

ex-

ogenous

factors

that

influence

those

needs

and

pref-

erences.

For

example,

several

managers

indicated

that

a

market

orientation

includes

monitoring

factors

such

as

government

regulations

and

competition

that

influ-

ence the

needs

and

preferences

of

their

customers.

Several

interviewees who

cater to

organizational

cus-

tomers

emphasized

that a

market

orientation

includes

an

analysis

of

changing

conditions in

customers'

in-

dustries and

their

impact

on

the

needs

and

wants

of

customers.

Likewise,

the

importance

of

monitoring

competitor actions and how they might affect cus-

tomer

preferences

emerged

in

the

course of

the

inter-

views.

(Day

and

Wensley

1983 also

point

out the

lim-

itations

of

focusing

on

customers

to

the

exclusion of

competitors.)

Hence,

though

market

intelligence

per-

tains

to

customer

needs and

preferences,

it

includes

an

analysis

of how

they

may

be

affected

by

exogenous

factors

such

as

government

regulation,

technology,

competitors,

and

other

environmental

forces.

Envi-

ronmental

scanning

activities

are

subsumed

under

market

intelligence

generation.

An

important

idea

expressed

by

several

executives

is

that

effective

market

intelligence

pertains

not

just

to currentneeds, but to future needs as well. This idea

echoes

Houston's

(1986)

assertion

and

reflects

a

de-

parture

from

conventional

views

(e.g.,

find

a

need

and fill

it )

in

that it

urges organizations

to

anticipate

needs

of

customers

and

initiate

steps

to

meet

them.

The

notion

that

market

intelligence

includes

antici-

pated

customer

needs

is

important

because

it

often

takes

years

for

an

organization

to

develop

a

new

product

offering.

As a

senior

vice

president

of

a

large

indus-

trial

services

company

observed:

[When]

should

[our

company]

nter

he

[certain

er-

vices]

area? s

therea

market

here

yet?

Probably

ot.

But

there's

going

to be

one

in

1990,

'91, '92,

'96.

And

you

don't

wantto

be

too

late

because

t's

going

to

take

you

a

couple

of

years

gettingup

to

speed,

getting

your

reputation

stablished.

So

you've

really

got

to

jump

into it

two

years

before

you

think

[the

market or

it is

going

to

develop].

Though

assessment of

customer

needs is

the

cor-

nerstone

of

a

market

orientation,

defining

customers

may not be simple. In some cases, businesses

may

have

consumers

(i.e.,

end

users

of

products

and

ser-

vices)

as

well

as

clients

(i.e.,

organizations

that

may

dictate

or

influence the

choices

or

end

users).

For

ex-

ample,

executives

of

several

packaged

goods

com-

panies

indicated

that

it

is

critical

for

their

organiza-

tions

to

understand

the

needs

and

preferences

of

not

just

end

customers

but

also

retailers

through

whom

their

products

are

sold.

This

sentiment

reflects

the

growing

power

of

retailers

over

manufacturers

owing

to

the

consolidation of

the

former,

retailers'

access

to

scanner

data,

and

increased

competition

among

man-

ufacturers due to proliferation of brands. As one ex-

ecutive

indicated,

keeping

retailers

satisfied

was

im-

portant

to

ensure

that

they

carried

and

promoted

his

products,

which

in

turn

enabled

him

to

cater

to

the

needs

of

his

end

customers.

Interestingly,

in

the

1920s

and

1930s,

the

term

customer

primarily

referred

to

distributors

who

pur-

chased

goods

and

made

payments

(McKitterick

1957).

Starting

about

the

1950s,

the

focus

shifted

from

dis-

tributors to

end

consumers

and

their

needs

and

wants.

Today

the

appropriate

focus

appears

to

be

the

market,

which

includes

end

users

and

distributors as

well

as

exogenous

forces

that

affect

their

needs

and

prefer-ences.

Identifying

who

an

organization's

customers

are

is

even

more

complex

when

service is

provided

to

one

party,

but

payments

are

received

from

another. For

example,

the

director

of

marketing

for

a

health

care

organization

recalled:

In

the

past

we

asked

patients

what

they

wanted

or

services,

how

they

wanted

he

service

delivered.

Now

the

patient

s no

longer

making

hose

decisions.

[It

is]

more

complicated.

We

define]

our

customers

o-

day

as

those

paying

for

the

patient's

care.

The

generation

of

market

intelligence

relies

not

juston

customer

surveys,

but

on

a host

of

complementary

mechanisms.

Intelligence

may

be

generated

through

a

variety

of

formal as

well

as

informal

means

(e.g.,

in-

formal

discussions

with

trade

partners)

and

may

in-

volve

collecting

primary

data

or

consulting

secondary

sources.

The

mechanisms

include

meetings

and

dis-

cussions

with

customers

and

trade

partners

(e.g.,

dis-

tributors),

analysis

of

sales

reports,

analysis

of

world-

wide

customer

databases,

and

formal

market

research

such

as

customer

attitude

surveys,

sales

response

in

4 / Journalof Marketing, pril1990







test

markets,

and so on. The

following quotation

from

the

director

of

marketing

in a

high-tech

industrial

products

company

illustrates

the

information

collec-

tion and

analysis activity.

We do a lot of

visiting

with

customers,

talking

with

customers

on

the

phone,

we read

the trade

press-it

is full of

good

information

about what

our

competi-

tors are

doing.

We

always

want to

position

relative

to

competitors.

A

lot of

marketing

is

information

gathering.

Importantly,

intelligence generation

is not the

ex-

clusive

responsibility

of a

marketing department.

For

example,

R&D

engineers

may

obtain information

at

scientific

conferences,

senior executives

might

un-

cover trends

reported

in trade

journals,

and

so

on.

Managers

in several

industrial

products

companies

in-

dicated

that

it

was routine for their R&D

personnel

to

interact

directly

with

customers

to assess

their

needs

and

problems

and

develop

new business

targeted

at

satisfying

those needs.

One

company

we

interviewed

goes

to extreme

lengths

to

encourage exchange

of

in-

formation between nonmarketing employees and cus-

tomers.

For

its annual

open

house,

invitations

to

customers are hand delivered

by

manufacturing-not

marketing-personnel.

Customers

visit

the

plant

and

interact with

shop

floor

personnel

as well as

white

collar

employees.

This

approach

not

only

enables

manufac-

turing

personnel

to understand better the

purchase

mo-

tivations

of

customers,

but also

helps

customers to

ap-

preciate

the limits and constraints

of

processes

involved

in

manufacturing

items

they require.

As

the

president

of this

company

described it:

[The

open

house ]

does two

things

for

you.

First,

it impresses the customers that the people in manu-

facturing

are

interested n

your

business,

and

the

other

thing

is that it

impresses

on the

people

in

manufac-

turing

that

there are

people

who

buy

the

product-

real,

live-bodied,

walking-around

people.

Our

peo-

ple

learn,

but our

customers

are educated at

the

same

time.

To

help

it

anticipate

customer needs

accurately,

one

blue

chip

industrial

product

company

assigns

cer-

tain

individuals

exclusively

to

the task

of

studying

trends

and

forces

in

the

industries

to which

major

customer

groups belong

(see

related

discussion

by

Lenz

and

Engledow

1986).

This

company goes

so

far

as

to

identify

future

needs of

customers and

plan

future of-

ferings jointly

with customers.

The

important

point

is

that

generation

of

market

intelligence

does

not

stop

at

obtaining

customer

opinions,

but also

involves

careful

analysis

and

subsequent

interpretation

of

the

forces

that

impinge

on

customer

needs

and

preferences.

Equally

important,

the

field

findings

suggest

that

the

genera-

tion

of market

intelligence

is

not

and

probably

cannot

be the

exclusive

responsibility

of

a

marketing

depart-

ment

(see

also

Webster

1988).

Rather,

market

intel-

ligence

is

generated

collectively

by

individuals

and

departments

throughout

an

organization.

Mechanisms

therefore

must be

be in

place

for

intelligence

gener-

ated at

one

location to be

disseminated

effectively

to

other

parts

of

an

organization.

Intelligence

dissemination.

As the

interviews

pro-

gressed,

it

became

increasingly

clear that

responding

effectively

to a

market

need

requires

the

participation

of

virtually

all

departments

in

an

organization-R&D

to

design

and

develop

a

new

product, manufacturing

to

gear up

and

produce

it,

purchasing

to

develop

ven-

dors for

new

parts/materials,

finance

to fund

activi-

ties,

and so

on.

Several

managers

noted that

for an

organization

to

adapt

to

market

needs,

market

intel-

ligence

must

be

communicated, disseminated,

and

perhaps

even sold

to

relevant

departments

and

indi-

viduals

in the

organization.

Marketing managers

in two

consumer

products

companies

developed

and circu-

lated

periodic

newsletters to

facilitate

dissemination

of

market

intelligence.

These

activities

echo

sugges-

tions in

the

literature that

organizational

direction is a

result of

marketing

managers

educating

and

commu-

nicating with managers in other functional areas (Levitt

1969)

and

that

marketers'

most

important

role

may

be

selling

within the

firm

(Anderson

1982).

As

noted

be-

fore,

however,

market

intelligence

need not

always

be

disseminated

by

the

marketing

department

to

other

de-

partments.

Intelligence

may

flow in

the

opposite

di-

rection,

depending

on

where it is

generated.

Effective

dissemination of

market

intelligence

is

important

be-

cause it

provides

a

shared

basis for

concerted

actions

by

different

departments.

A

vice

president

of

an in-

dustrial

products

company

recounted

the

intelligence

dissemination

process

for

a

new

product

required

by

a customer:

I

get

engineering

involved.

Engineering gets

produc-

tion

involved.

We

have

management

lunches

and in-

formal

forums.

Call

reports

circulate.

By

the

time

you

design, [you

have]

engineering,

production,

and

pur-

chasing

involved

early

in

the

process.

A

formal

intelligence

dissemination

procedure

is

obviously

important,

but

the

discussions

with

man-

agers

indicated

that

informal

hall

talk

is

an

ex-

tremely

powerful

tool

for

keeping

employees

tuned

to

customers

and

their

needs.

Despite

sparse

treatments

of

the

effects of

informal

information

dissemination

in

virtually any

literature

(for

a

rare

exception, see

Aguilar

1967),

the

importance

of

this

factor

is

well

recognized

by

managers

and

it

is

tapped

extensively.

For

example,

the

vice

president

of

a

manufacturing

firm

indicated

that

customer

information

is

dissemi-

nated

in her

organization

by

telling

stories

about

cus-

tomers,

their

needs,

personality

characteristics,

and

even their

families.

The

idea is

to

have

the

secretaries,

engineers,

and

production

personnel

get

to

know

customers.

Her

description

of

informal

intelligence

dissemination

follows.

Market

Orientation

5







One

goal

when

I took over

was

to know

everything

about

customers,

[whether]

they

liked

cats, know

[their]

wives'

names,

favorite

pet

peeve

about

our

products.

Our sales

reps

need

to know this

.

..

I

do

a

lot of

storytelling.

Later,

[I]

developed

software

to

computerize

all

this.

Everyone

in the

organization

has

access

to this

database.

This

emphasis

on

intelligence

dissemination

par-

allels

recent

acknowledgement

of

the

important

role

of

horizontal

communication

in service

organiza-

tions (Zeithaml, Berry, and Parasuraman 1988). Hor-

izontal

communication is the

lateral flow

that

occurs

both

within

and between

departments

(Daft

and

Steers

1985)

and

serves to

coordinate

people

and

depart-

ments to

facilitate the

attainment

of

overall

organi-

zational

goals.

Horizontal communication

of

market

intelligence

is one

form of

intelligence

dissemination

within

an

organization.

Responsiveness.

The third

element

of a

market

ori-

entation is

responsiveness

to

market

intelligence.

An

organization

can

generate

intelligence

and

disseminate

it

internally;

however,

unless it

responds

to

market

needs, very little is accomplished. Responsiveness is

the

action taken

in

response

to

intelligence

that is

gen-

erated and

disseminated.

The

following

statement

by

an

account

executive in

a

service

organization

de-

scribes this

type

of

responsiveness.

We are

driven

by

what the

customer wants.

[We]

try

to

gather

data,

do

research,

put together

new

prod-

ucts

based on

this

research,

and then

promote

them.

The

field

findings

indicate

that

responsiveness

to

market

intelligence

takes the

form

of

selecting

target

markets,

designing

and

offering

products/services

that

cater

to

their

current and

anticipated

needs,

and

pro-

ducing,

distributing,

and

promoting

the

products

in

a

way

that

elicits

favorable

end-customer

response.

Vir-

tually

all

departments-not

just

marketing-partici-

pate

in

responding

to

market

trends in

a

market-ori-

ented

company.

Synthesis

and

Commentary

From

the

preceding

discussion,

we

offer

the

following

formal

definition

of

market

orientation.

Market

orientation is

the

organizationwide

genera-

tion of

market

intelligence

pertaining

to

current

and

future

customer

needs,

dissemination

of

the

intelli-

gence across departments, and organizationwide re-

sponsiveness

to it.

Defining

market

orientation

as

organizationwide

generation, dissemination,

and

responsiveness

to

mar-

ket

intelligence

addresses

the

concerns

of

Barksdale

and

Darden

(1971)

by

focusing

on

specific

activities

rather

than

philosophical

notions,

thereby

facilitating

the

operationalization

of

the

marketing

concept.

In-

terestingly,

it

appears

more

appropriate

to

view

a

mar-

ket

orientation

as

a

continuous

rather

than

a

dicho-

tomous

either-or

construct.

As

the

sales

manager

for

Asia in

an

industrial

products

company

put

it:

The

first

thing

to

recognize

s

that

there

s no

abso-

lute,

that

there

are

many

shades

of

gray.

In

other

words,

organizations

differ

in

the

extent

to

which

they generate

market

intelligence,

disseminate

it

internally,

and

take

action

based

on

the

intelligence.

It therefore is appropriate to conceptualize the market

orientation

of

an

organization

as

one

of

degree,

on

a

continuum,

rather

than as

being

either

present

or

ab-

sent.

This

conceptualization

facilitates

measurement

by

avoiding

certain

difficulties

inherent in

asking

in-

formants

to

indicate

whether

or

not

their

organization

is

market

oriented

(e.g.,

it

may

be

somewhat

market

oriented).

The

proposed

definition

suggests

that

a

measure of

market

orientation

need

only

assess

the

degree

to

which

a

company

is

market

oriented,

that

is,

generates

intelligence,

disseminates

it,

and

takes

actions

based

on

it.

Relatedly,

the

appropriate

unit of

analysis

appears

to

be

the

strategic

business

unit

rather

than the

corporation

because different

SBUs

of a

cor-

poration

are

likely

to

be

market

oriented to

different

degrees.

We

next

discuss

antecedents

and

consequences

of

a

market

orientation,

and

moderators

of

the

linkage

between

market

orientation

and

business

perfor-

mance. We

draw

on

the

marketing

literature,

man-

agement

literature,

and

field interviews

for

develop-

ing

research

propositions.

Research

Propositions

Figure

1 is

a

conceptual

framework

for

the

following

discussion.

Briefly,

the

framework

comprises

four

sets

of

factors:

(1)

antecedent

conditions

that

foster

or

dis-

courage

a

market

orientation,

(2)

the

market

orienta-

tion

construct,

(3)

consequences

of

a

market

orien-

tation,

and

(4)

moderator

variables

that

either

strengthen

or

weaken

the

relationship

between

market

orientation

and

business

performance.

We

discuss

each

of

the

four

factors

and

develop

propositions

based

on

the

litera-

ture

and

the

field

interviews.

Antecedents

to a

Market

Orientation

Antecedents

to

a

market

orientation

are

the

organi-

zational

factors

that

enhance or

impede

the

imple-

mentation

of

the

business

philosophy

represented

by

the

marketing

concept.

Our

examination

of

the

liter-

ature

and

the

insights

from

the

field

interviews

reveal

three

hierarchically

ordered

categories

of

antecedents

to a

market

orientation:

individual,

intergroup,

and

or-

ganizationwide

factors.

We

label

these

as

senior

man-

agement

factors,

interdepartmental

dynamics,

and

or-

ganizational

systems,

respectively.

6 / Journalof

Marketing, pril

1990







FIGURE

Antecedents

and

Consequences

of

a

Market

Orientation

l~~~~~~~~~~~~~~~

r

MARKET

ORIENTATION

kj

r

SUPPLY - SIDE

MODERATORS

V

I

DEMAND -

SIDE

MODERATORS

^

^~~~~~~~~~~-

r-

ORGANIZATIONAL

SYSTEMS

J

Senior

management

factors.

The

role of

senior

management

emerged

as one of the most

important

factors in

fostering

a

market

orientation

(see

Figure

2). Intervieweesrepeatedlyemphasizedthe powerful

impact

of

top

managers

on an

organization.

The

fol-

lowing quotations

are

representative

of the

ideas

that

surfaced in

the interviews.

We'll

do

almost

a

$100

million

[worth

of

sales]

this

year.

We

have a

customer that

bought

[a

mere]

$10,000

worth

of

services.

[He]

calls the

president

[and

launches into a

long

tirade of

complaints].

[The

president]

writes down what

he

says

and

responds

to

him

in

writing.

He

investigates

the

difficulty.

He

gets

back to him.

In that

process,

if

you

are

a

junior

en-

gineer

who

just

worked on

a

$10,000

project

and

the

president

calls

you

up

and

says

let's

talk

about

this

and work

out some

kind

of

response

to

him,

the

wordspreads hroughout hebase of thecompany[that]

we're a

customer-oriented

company,

we're

market-

place

oriented,

we

want

to

satisfy

customer

needs.

-Senior

vice

president,

industrial

services

company

The

founder

of

this

organization

is

a

salesman. His

shortcoming

is

that

he does not

know

what

marketing

is.

We

reflect the

leader.

-Marketing manager,

service

organization

The

critical role

of

top

managers

in

fostering

a

market

orientation is

also

reflected in

the

literature.

For

example,

Webster

(1988)

asserts

that

a

market

CONSEOUENCES

f

CUSTOMER

RESPONSES

k.

fll

BUSINESS

PERFORMANCE

j

EMPLOYEE

RESPONSES

J

orientation

originates

with

top

management

and

that

customer-oriented

alues

and

beliefs

are

uniquely

he

responsibility

of

top

management

p.

37).

Likewise,

Felton (1959) asserts that the most important ngre-

dientof

a

market

orientation

s

an

appropriate

tate of

mind,

and

that

it is

attainable

only

if

the

board

of

directors,

chief

executive,

and

top-echelon

executives

appreciate

he

need to

develop

this

marketing

tate

of

mind

(p.

55).

In

other

words,

the

commitmentof

top

managers

is

an

essential

prerequisite

to a

market ori-

entation.

Additionally,

Levitt

(1969,

p.

244)

argues

that

one

of the

factors

that

facilitates

the

implementation

of

the

marketing

concept

is

the

presence

of

the

right

signals

from the

chief

operating

officer to

the

entire

corpo-

ration

regarding

its

continuing commitment to the

marketing

concept.

In

a

similar

vein,

Webster

(1988,

p.

37)

suggests

that

CEOs

must

give

clear

signals

and

establish

clear

values

and

beliefs

about

serving

the

customer.

Thus,

these

scholars

assert

that in

ad-

dition to

being

committed to

a

market

orientation,

top

managers

must

clearly

communicate

their

commit-

ment

to all

concerned in

an

organization.

Interestingly,

the

management

literature

goes

a

step

further

to

provide

novel

insights.

Argyris

(1966)

ar-

gues

that

a

key

factor

affecting junior

managers

is

the

Market

rientation7

MARKET

ORIENTATION

MODERATORS

SENIOR

MANAGEMENT

FACTORS

INTERDEPARTMENTAL

DYNAMICS







FIGURE

Senior

Management

Factors and

Market

Orientation

gap

between

what

top managers

say

and what

they

do

(e.g.,

they say

be market

oriented,

but cut

back

marketresearchfunds, discouragechanges). Argyris

examined 265

decision-making

meetings

with

senior

executives and concluded that

the

actual

behavior

of

managers

does

not conform to

their verbal

espousals.

One could

argue,

however,

that

if

the

gap

is

consis-

tent

over

time,

junior managers

may

to

be able to

infer

what

top

managers ruly

desire. In

contrast,

f

the size

and/or

direction

of

the

gap

is

inconsistent over

time,

junior

managers

are

unlikely

to be able

to infer

top

managers'

actual

preferences.

Such

variability

s

likely

to

lead to

ambiguity

about the amount of

effort and

resources

unior managers

should allocate to

market-

oriented

tasks,

thereby leading

to lower

market ori-

entation.Hence:

Pia:

The

greater

he

variability

over time in

the

gap

be-

tween

top

managers'

ommunications nd

actions

re-

lating

to a market

orientation,

he

greater

he

junior

managers'

ambiguity

about he

organization's

esire

to

be market

oriented.

Plb:

The

greater

the

junior managers'

ambiguity

about the

organization's

desire

to be

market

oriented,

the

lower

the

market orientation

of the

organization.

A

market

orientation

nvolves

being

responsive

to

market

intelligence.

Changing

market

needs

call

for

the

introductionof

innovative

products

and

services

to matchthe evolvingneeds. The introduction f new/

modified

offerings

and

programs,

however,

is inher-

ently risky

because the

new

offerings may

fail. As

two

executives

noted:

Hospitals

cannot

survive

unless

they

are

innovative

throughout

the

organization.

It

means

taking

risks,

doing

some

real

concrete

things

with

customers.

-Marketing

director,

service

organization

To

be

marketing

oriented

is

not to

be

safe

because

you're

running

a

risk. You

have to

invest in

your

ideas. To

not be

marketing

oriented is

to

be

safe.

[It

means

doing]

the

same

old

[thing].

You're not in-

vesting

in

your

business,

not

[taking]

risks.

-President,

industrial

services

company

In the

course of

the

discussion

with

the

latter

execu-

tive,

it

became

clear

that

top

managers'

response

to

innovative

programs

that

do

not

succeed

sends

clear

signals

to

junior

employees

in an

organization.

If

top

managers

demonstrate

a

willingness

to

take

risks and

accept

occasional

failures

as

being

natural,

junior

managers

are

more

likely

to

propose

and

introduce

new

offerings

in

response

to

changes

in

customer

needs.

In

contrast,

if

top

managers

are risk

averse

and in-

8 / Journalf Marketing,pril 990







tolerant

of

failures,

subordinates

are less

likely

to

be

responsive

to

changes

in customer

needs.

Hence:

P2:

The

greater

he

riskaversion

f

top

managers,

he

ower

the market

orientation

f the

organization.

Because

a

marketorientation

involves

being

re-

sponsive

to

changing

customer/client

needs

with

in-

novative

marketingprograms

and

strategies,

it can

be

viewed as a

continuous

nnovative

behavior.

Hambrick

and Mason (1984) suggest thatorganizationsheaded

by

top

managers

who

are

young,

have extensive

for-

mal

education,

and are

of low socioeconomic

origin

(and,

by

implication,

have

demonstrated

upward

so-

cial

mobility)

are

more

likely

to

pursue

risky

and

in-

novative

strategies.

In

the

diffusion

of innovations

it-

erature,

formal

education

and

upward

mobility

are

reported

as

being

related

consistently

to

innovative

behavior

(see

Rogers

1983,

ch.

7). However,

the

age

variable does

not

produce

consistent

findings

across

studies.

Taken

together,

these

findings

suggest

that

the

market

orientation

of

an

organization

may

be

a

function of the formal educationof its senior man-

agers

and

the

extent to

which

they

are

upwardly

mo-

bile.

More

formally:

P3:

The

greater

he

senior

managers'

1)

educational

at-

tainment nd

(2)

upward

mobility,

he

greater

he

mar-

ket

orientation

f

the

organization.

A

positive

attitude

oward

change

has

been

linked

consistently

to

individual

willingness

to

innovate.

In

a

comprehensive

review,

Rogers

(1983,

p.

260)

re-

ports

that 43

of

57

studies

found

a

positive

relation-

ship

between

hese

two

constructs.

Willingness

o

adapt

and

change marketingprograms

on

the

basis

of anal-

yses

of

consumer

and

market

trends

is

a

hallmark

of

a

market-oriented

irm.

Hence,

top

managers'

open-

ness

to

new

ideas

and

acceptance

of

the

view

that

change

is

a

critical

component

to

organizational

uc-

cess

are

likely

to

facilitate

a

market

orientation.

That

is:

P4:

The

more

positive

the

senior

managers'

attitude

o-

ward

change,

the

greater

he

market

rientation

f

the

organization.

Certain

characteristicsf

department

managers

and

the

natureof

interactions

among

them

appear

likely

to affect an organization'smarketorientation

hrough

their

impact

on

interdepartmental

onflict

(see

Figure

2).

Interdepartmental

onflict

is

tension

between

two

or

more

departments

hat

arises

from

incompatibility

of

actual

or

desired

responses

(cf.

Gaski

1984;

Raven

and

Kruglanski

1970,

p.

70).

Felton

(1959)

and

Levitt

(1969)

suggest

that it

is

critical

for

a

marketing

vice

president

to

be

able to

win

the

confidence

and

co-

operation

of

his

or

her

corporate

peers

to

minimize

conflict

and

engender

a

market

orientation,

hough

hey

do

not

elaborate

on

the

factors

that

afford

this

ability.

The

implication

is

that:

P5:

The

greater

he

ability

of

top

marketingmanagers

o

win

the

confidence

of

senior

nonmarketing

anagers,

the

lower

the

interdepartmental

onflict.

Interdepartmental

dynamics.

Interdepartmental

dynamics

are

the

formal

and

informal

nteractions

and

relationships

among

an

organization's

departments.

n

P5we introduced he firstinterdepartmentalonstruct,

conflict.

We

begin

our

discussion

in

this

section

with

the

linkage

between

interdepartmental

onflict

and

market

orientation,

then

examine

additional

interde-

partmental

dynamics

(see

Figure

3).

Levitt

(1969), Lusch,

Udell,

and

Laczniak

1976),

and

Felton

(1959)

suggest

that

interdepartmental

on-

flict

may

be

detrimental

o

the

implementation

of

the

marketing

oncept.

Interdepartmental

onflict

may

stem

from

natural

desires

of

individual

departments

o be

more

important

or

powerful,

or

may

even

be

inherent

in

the

charters

of

the

various

departments.

For

ex-

ample, Levitt (1969) arguesthat the job of a manu-

facturing

vice

president

is

to

run

an

efficient

plant.

Therefore

t

is

only

natural

or

that

individualto

op-

pose

costly

endeavors

that

might

be

called

for

by

a

market

orientation.

Recent

research

e.g.,

Ruekert

and

Walker

1987)

suggests

that

interdepartmental

onflict

inhibits

communication

across

departments.

Hence in-

terdepartmental

onflict

appears

ikely

to

inhibit

mar-

ket

intelligence

dissemination,

an

integral

component

of

a

market

orientation.

Additionally,

tension

among

departments

s

likely

to

inhibit

concerted

response

by

the

departments

o

market

needs,

also a

component

of

market

orientation.We thereforeexpect that:

P6:

The

greater

he

interdepartmental

onflict,

the

lower

the

market

orientation

f

the

organization.

A

second

interdepartmental

ynamic

that

emerged

in

several

interviews

as

an

antecedent

of

a

market

ori-

entation

is

interdepartmental

connectedness.

This

variable

is

the

degree

of

formal

and

informal

direct

contact

among

employees

across

departments.

For

ex-

ample,

one

executive

noted

that

to

improve

ts

market

orientation,

her

organization

opened

communication

channels

across

departments-in

marked

contrast

to

the

earlier

practice

of

departments perating ndepen-

dently

of one another

and

coordinated

only

by

top

management.

One

interviewee

indicated

that

her

or-

ganizationformally

required

periodic

meetings

of

em-

ployees

from

different

departments,

hereby

facilitat-

ing

the

sharing

of

market

intelligence.

The

importance

of

interdepartmental

onnected-

ness in

facilitating

the

dissemination

of

and

respon-

siveness

to

market

intelligence

is

supported

by

the

evaluation

iterature

cf.

Cronbach

nd

Associates

1981)

and

the

marketing

iterature

cf.

Deshpande

nd

Zaltman

Market

Orientation

9







FIGURE

Interdepartmental

Dynamics

and Market Orientation

P6

P7

INTERDEPARTMENTAL

CONNECTEDNESS

CONCERN

FOR IDEAS

OF

OTHER

DEPARTMENTS

P8

1982).

Indeed,

the

key predictors

of research infor-

mation utilization

in

program

evaluation

settings

are

the extent and

quality

of interaction between

the

eval-

uators and the program personnel (see Patton 1978).

Hence:

P7:

The

greater

the

interdepartmental

connectedness,

the

greater

the

market

orientation

of the

organization.

As

Figure

3

illustrates,

an

additional

construct

per-

taining

to

interdepartmental

dynamics suggested

by

the literature on

group dynamics

is

concern

for others'

ideas

(Argyris

1965, 1966).

Concern

for others' ideas

refers

to

openness

and

receptivity

to

the

suggestions

and

proposals

of other

individuals or

groups.

In

the

previously

noted

study

on decision

making,

Argyris

(1966) observed that low levels of concern are related

directly

to

restricted information

flows, distrust,

and

antagonism,

which

result in ineffective

group pro-

cesses.

Therefore,

low levels

of

concern

for

the ideas

of

individuals

in other

departments

can be

expected

to

impede

the dissemination

of

market

intelligence

across

departments

as well as the

responsiveness

of

individuals

to

intelligence

generated

in

other

depart-

ments. That is:

P8:

The

greater

the

concern

for ideas of

employees

in

other

departments,

the

greater

the market

orientation of the

organization.

Organizational systems.

The third

set

of

anteced-

ents to a market orientation relate to organizationwide

characteristics

and

therefore are

labeled

organiza-

tional

systems

(see

Figure

4).

A

set

of

barriers to a

market orientation

briefly

hinted at in

the

marketing

literature is

related to

the structural

form of

organi-

zations.

Lundstrom

(1976)

and Levitt

(1969)

discuss

departmentalization

or

specialization

as

a

barrier to

communication

(and

hence

intelligence

dissemina-

tion).

Additionally, Stampfl

(1978)

argues

that

greater

formalization

and

centralization

make

organizations

less

adaptive

to

marketplace

and

environmental

changes.

These

references

to

organizational

structure have

their roots in the

organizational

sciences literature.

Formalization is

the

degree

to

which

rules

define

roles,

authority

relations,

communications,

norms

and

sanc-

tions,

and

procedures

(Hall, Haas,

and

Johnson

1967).

Centralization

is

defined

as the

delegation

of

decision-

making

authority

throughout

an

organization

and the

extent of

participation

by

organizational

members in

decision

making

(Aiken

and

Hage

1968).

Histori-

cally,

both

formalization

and

centralization

have

been

found to

be

related

inversely

to

information

utilization

10 / Journal f Marketing,pril 990







FIGURE4

Organizational Systems

and

Market

Orientation

(Deshpande

and

Zaltman

1982;

Hage

and

Aiken

1970;

Zaltman, Duncan, and Holbek 1973). In our context,

information

utilization

corresponds

to

being

respon-

sive

to

market

intelligence.

Thus,

the

literature

sug-

gests

that

structural

characteristics of an

organization

can

influence its market

orientation.

Interestingly,

there is

reason to

believe

that or-

ganizational

structure

may

not

affect all

three

com-

ponents

of a market

orientation

in

the

same

way.

Be-

cause

a

market orientation

essentially

involves

doing

something

new or

different in

response

to

market

con-

ditions,

it can

be

viewed as a form

of

innovative be-

havior.

Zaltman,

Duncan,

and

Holbek

(1973,

p.

62)

characterize

innovative behavior

as

having

two

stages,

(1)

the initiation

stage

(i.e.,

awareness and decision-

making stage)

and

(2)

the

implementation

stage

(i.e.,

carrying

out

the

decision).

In our

context,

the

initia-

tion

stage

corresponds

to

intelligence

generation,

dis-

semination,

and

the

design

of

organizational

re-

sponse,

whereas the

implementation

stage

corresponds

to the

actual

organizational

response.

Zaltman,

Duncan,

and Holbek

(1973)

draw

on nu-

merous

studies

to

argue

that

organizational

dimen-

sions such as

departmentalization,

formalization,

and

centralization

may

have

opposite

effects

on

the two

stages of innovative behavior. In particular, they in-

dicate

that

whereas

these

variables

may

hinder the

ini-

tiation

stage

of

innovative

behavior,

they may

facili-

tate

the

implementation

stage

of

innovative

behavior.

Hence

departmentalization,

formalization,

and

cen-

tralization

may

be

related

inversely

to

intelligence


and

response

design,

but

positively

to

response

implementation.

P9a:

The

greater

the

departmentalization, (1)

the lower

the

intelligence


and

response

design

and

(2)

the

greater

the

response

implementa-

tion.

P9b:

The

greater

the

formalization,

(1)

lower

the

intelli-

gence generation, dissemination, and response design

and

(2)

the

greater

the

response

implementation.

Pg:

The

greater

the

centralization,

(1)

the

lower the

in-

telligence

generation,

dissemination,

and

response

design

and

(2)

the

greater

the

response

implementa-

tion.

The

management

literature

reflects a

rich

history

of

work on

measurement/reward

systems

and

their

ef-

fects

on the

attitudes

and

behavior

of

employees

(see

Hopwood

1974;

Lawler

and

Rhode

1976

for

reviews).

Recent

research in

marketing

builds

on

this

work

by

Market

Orientation

11







emphasizing

the

importance

of measurement

and

re-

ward

systems

in

shaping

both desirable

and

undesir-

able behaviors

(cf.

Anderson

and Chambers

1985;

Jaworski

1988).

Webster

1988,

p.

38)

argues

hat

the

key

to

developing

a

market-driven,

ustomer-oriented

business

lies

in how

managers

are evaluated

and

re-

warded. He observes

that

if

managers

are

evaluated

primarily

on the basis

of short-term

profitability

and

sales,

they

are

likely

to focus

on those

criteria

and

neglect

marketfactors such as customer satisfaction

that ensure

the

long-term

health

of an

organization.

Webster's observations

are

supportedby

the

prac-

tices of several

organizations

ncluded

in our

study.

Though

only

one

organization ampled appears

o

tie

compensation

to market-oriented

erformance,

f

re-

wards are construed more

broadly

to

include

appre-

ciation,

recognition,

and

approval,

a

larger

number

of

organizations

n the

sample

measure

and reward

mar-

ket-based

performance.

For

example,

several

organi-

zations make

it a

point

to

single

out and

recognize

employees

who are

identified

by

customers as

being

particularlyhelpful. Other organizationshave insti-

tuted

one

or

more variationsof

the

employee

of

the

month

theme.

However,

considerable

variance is

evident in

the

extent

to which

organizations

measure and

reward

market-based

performance.

One

marketingmanager

recounted

a current

situation n

which

employees

are

rewarded for

short-term

inancial

performance

(i.e.,

units

sold).

She noted

that this

system

works

against

a

long-run

market

orientation

and

any

long-run

stra-

tegic

orientation

hat

the

organization

may

decide

to

take.

A

sales

manager

in

an

industrialfirm

made

a

similar

observation,notingthathis sales reps may lead

the

company

astray

because

their

reward

systems

are

based

on

sales in

the short

run.

Currently,

no

system

is

in

place

to

encourage

them

to

think

strategically.

The

preceding

discussion

suggests

that:

P,O:

The

greater

he

relianceon

market-based

actors

for

evaluating

and

rewarding

managers,

he

greater

he

market

orientation f

the

organization.

All

of

the

preceding

organizationwide

character-

istics

involve

formal

systems

within

organizations.

Recent

writings

in

the

management

iterature

reflect

an

increasing ecognition

f

the

important

ole of

looser,

less formal systems in shapingorganizationalactivi-

ties

(e.g.,

Feldmanand

March

1981;

Ouchi

1979;

Ouchi

and

Wilkens

1985;

Pettigrew

1979;

Smircich

1983).

More

recently,

these

informal

characteristics

have

gained

the

attention

of

marketing

academicians

(cf.

Deshpande

nd

Webster

1989;

Jaworski

1988).

Though

several

different

concepts

can

be

identified,

an

infor-

mal

organizational

characteristic

that

appears

to

be

particularly

elevant

as a

determinant

f a

market

ori-

entation

is

political

norm

structure,

a

variable

dis-

cussed

in

some

detail

by

Porter,

Allen,

and

Angel

(1981).

Political

behavior

consistsof

individuals'

attempts

to

promote

self-interests

and

threaten

others'

interests

(Porter,Allen,

and

Angel

1981).

Political

norm

struc-

ture

is an

informal

system

that

reflects

the

extent to

which

members

of

an

organization

view

political

be-

havior n

the

organization

as

being acceptable.

A

mar-

ket

orientation

calls for a

concerted

responseby

the

various

departments

of an

organization

to

market in-

telligence.

A

highly

politicized

system,

however,

has

the

potential

for

engendering

interdepartmental

on-

flict

(thereby

nhibiting

a

market

orientation).

Hence,

Pl,:

The

greater

he

acceptance

f

political

behavior n

an

organization,

he

greater

he

interdepartmental

on-

flict.

Linkages

Among

the

Market

Orientation

Components

Literature

uggests

that the

three

elementsof

a

market

orientation

may

be

interrelated.

For

example,

the lit-

erature on source credibility (cf. Petty and Cacioppo

1986;

Zaltman

and

Moorman

1988)

suggests

that in-

dividuals in an

organization

are

likely

to

be more re-

sponsive

to

intelligence

generated

by

individual(s)

who

are

regarded

as

having

high

expertise

and

trustwor-

thiness.

That

is,

responsiveness

to

market

intelligence

is

likely

to

be

a

function

of

the

characteristics

of

the

source

that

generates

the

intelligence.

Further,

the lit-

erature

on

research

utilization

(cf.

Deshpande

and

Zaltman

1982)

suggests

that

responsiveness

may

be a

functionof

such

factors as

the

political

acceptability

of

intelligence

and

the

extent

to

which

it

challenges

the statusquo. Similarly, the extent to which intelli-

gence

is

disseminated

within

an

organization

may

de-

pend

on the

political

acceptability

of

intelligence

and

the

challenge

posed

to

the

status

quo.

Hence

the

source

of

market

intelligence

and

the

very

nature

of

intelli-

gence

may

affect

its

dissemination

and

utilization

(i.e.,

responsiveness).

More

formally:

Pl2a:

The

greater

the

perceived

expertise

of

the

source

generating

market

ntelligence,

the

greater

he

re-

sponsiveness

o

it

by

the

organization.

Pl2b:

The

greater

he

perceived

rustworthiness

f

the

source

generating

market

ntelligence,

the

greater

he re-

sponsiveness

o

it

by

the

organization.

P12c:

Thesmaller hechallenge o thestatusquoposedby

market

ntelligence,

he

greater 1)

its

dissemination

and

(2)

the

responsiveness

o

it

by

the

organization.

Pi2d:

The

greater

the

political

acceptability

of

market in-

telligence,

the

greater 1)

its

dissemination

nd

(2)

the

responsiveness

o

it

by

the

organization.

Consequences

of a

Market

Orientation

Several

nsights

obtained

rom

the

field

interviews

and

the

literature

pertain

to

the

consequences

of

a

market

orientation.

The

interviews

uncovered

an

interesting

12 / Journalof Marketing, pril1990







consequence

of

a

market orientation

hat is

of

major

significance

to

large

corporations.

As the sales

man-

ager

for

Europe

of an industrial

products

company

in-

dicated:

[Market

orientation leads

to

a]

cohesive

product

fo-

cus,

clear

leadership,

better coordination

of sales

ac-

tivities,

much better

job

of

reviewing products

from

a worldwide

basis,

help

in terms of

differentiation.

In

essence,

the

executive

suggests

that

a

market

orientation acilitates

clarity

of focus and vision

in

an

organization's

strategy.

This benefit

corresponds

to

consistency,

the first of

Rumelt's

(1981)

four

crite-

ria-consistency,

frame,

competence,

and

workabil-

ity-for evaluating

strategies.

Consistency

is the

ex-

tent to which a

strategy

reflects

mutually

consistent

goals, objectives,

and

policies. Though

strategies

or-

mulated

by

a

single

individual seldom have

internal

inconsistencies,

the likelihood

of inconsistencies

in-

creases when

strategies

emerge

from

interactions

and

negotiations

among

multiple

individuals

in

different

parts

of an

organization.

A marketorientation

appears

to providea unifyingfocus for the efforts andprojects

of

individuals and

departments

within

the

organiza-

tion,

thereby leading

to

superiorperformance.

Not

surprisingly,virtually

all of

the

executives

in-

terviewednoted

that

a

marketorientation

nhances

the

performance

of an

organization.

The

typical

response

to

our

question

about

positive consequences

was

a

laundry

ist

of

favorable business

performance

n-

dicators such as

ROI,

profits,

sales

volume,

market

share,

and

sales

growth.

Preliminary

upport

or

some

of

these

consequences

s

reportedby

Narver

and

Slater

(1988).

Hence:

P13:

The

greater

the marketorientation of an

organization,

the

higher

its business

performance.

The second set

of

consequences

hat

emerged

from

the interviews

relate to

the effects

of a

market ori-

entation on

employees.

These

effects are

not

ad-

dressed

in

the extant

literature.A

large

number

of ex-

ecutives

noted that a

market

orientation

provides

psychological

and

social

benefits to

employees.

Sev-

eral

respondents

noted that a

market

orientation

eads

to a

sense of

pride

in

belonging

to an

organization

n

which

all

departments

and

individuals work

toward

the

common

goal

of

serving

customers.

Accomplish-

ing

this

objective

resultsin

employees

sharing

a feel-

ing

of

worthwhile

contribution,

as well

as

higher

lev-

els

of

job

satisfaction

and

commitment

to

the

organization.

The

vice

president

of a

consumer

prod-

ucts

company

described

some

of

these

consequences

as:

.

better

esprit

de

corps.

[You

get

the

feeling]

that

what

you

are

doing

is

satisfying.

I

think

people

feel

the need

to

contribute,

to

help

individuals,

the so-

ciety,

to

make a

contribution.

The

espirit

de

corps

construct

has

received

some

attentionn

the

management

iterature

e.g.,

Jones

and

James

1979)

and is

very

similar to the

teamworkcon-

struct

dentified

by

Zeithaml,

Berry,

and

Parasuraman

(1988)

in a

services

marketing

context. The

latter

au-

thors

suggest

that this

variable is

instrumental

n re-

ducing

the

gap

between

service

quality specifications

and

actual

delivery,

thereby

improving

consumers'

perceptions

of

service

quality.

Interestingly,

our

find-

ings suggest thatthe espiritde corps within an orga-

nization

may

itself be

improved

by

a

marketorien-

tation.

Therefore

we

propose

that:

P14:

The

greater

the

market

orientation,

the

greater

the

(1)

espirit

de

corps,

(2)

job

satisfaction,

and

(3)

organi-

zational

commitment of

employees.

The third

set of

consequences

of a

market orien-

tation

identified

by

the

respondents

nvolves

customer

attitudesand

behavior.The

thrustof

the

comments is

that a

market

orientation eads

to

satisfied

customers

who

spread

the

good

word to

other

potential

cus-

tomers

and

keep comingbackto theorganization.The

following quotations

llustrate

these

ideas.

.

.

.customer

satisfaction,

[positive]

word of

mouth,

repeat

business is

enhanced.

Customer

retention is

better for

us,

[it

is]

much

less

expensive.

-Executive

vice

president,

consumer

products

company

.

. .

develops

firm

reputation,

happy

customers.

Coming

through

when a

customer

is

in

a

jam

helps

[our]

reputation.

-Vice

president,

industrial

products

company

These

ideas

also

reflect

Kotler's

(1988)

assertion

that

a

market

orientation

s

likely

to

lead to

greater

cus-

tomersatisfactionand repeatbusiness. Hence:

P15:

The

greater

the

market

orientation,

(1)

the

greater

the

customer

satisfaction

and

(2)

the

greater

the

repeat

business from

customers.

The

literature

reflects

few

empirical

studies of

the

consequences

of a

market

orientation.

Most

studies

focus

primarily

on

the

extent to

which

the

marketing

concept

has

been

adopted

by

organizations,

ather

han

its

specific

consequences.

One

noteworthy

exception

is

the

Lawtonand

Parasuraman

1980)

study.

The

au-

thors

found

that

the

adoption

of

the

marketing

oncept

had no

apparent

ffect on

the

sources

of

new

productideas, the use of

marketing

researchin new

product

planning,

and

the

innovativeness of

new

product

of-

ferings.

In a

sense,

these

findings

run

counterto

the

assertions

of such

authors

as

Bennett and

Cooper

(1981),

Kaldor

(1971),

and

Tauber

1974),

who

argue

that

the

adoption

of

the

marketing

oncept

inhibits

or-

ganizations

from

developing

truly

breakthrough

n-

novations.

Lawton

and

Parasuraman

1980)

caution,

however,

that

additional

research

using

new

measures

is

needed

before

firm

conclusions

can

be

drawn.

Marketrientation13







Environmental Moderators

of

the

Market

Orientation-Business

Performance

Linkage

With a few

exceptions, writings

in the literature

end

to view the

marketingconcept

as

a

universally

rele-

vant

philosophy.

In

contrast,

the field interviews

elic-

ited several

environmental

ontingencies

or

conditions

under

which the

impact

of

a

market

orientation

on

business

performance

s

likely

to be minimal.

That

is,

the field findings suggest that certain contingencies

moderate

(i.e.,

increase

or

decrease)

the

strength

of

the

relationship

between

marketorientation

and

busi-

ness

performance.

In

the

following

discussion,

we

consider

four

such

contingencies

or

moderator

vari-

ables.

One moderator hat surfaced

in the course

of

the

interviews s market

urbulence-changes

in

the

com-

position

of customers

andtheir

preferences.

This

vari-

able is morefocused than the

widely

studied

environ-

mental turbulence construct.

The

role of

market

turbulence

n

influencing

the

desirability

of

a

market

orientationwas highlightedby the experienceof two

consumer

(food)

products

companies

that marketed

their

products

in a

specific region

in

the United

States.

The

population

in

this

region

had remained

unchanged

for

years,

and the

preferences

of

the customers

were

known

and

stable. Neither

company

did

much market

re-

search.

Over the last

few

years,

however,

the

region

had

received a

tremendous nflux

of

population

from

other

parts

of

the

country.

Both

companies

were

forced

to

initiate

research to

assess the needs and

preferences

of

the

new

potential

customers,

and

to

develop

new

products

to suit their

particular

preferences.

These ex-

periences

suggest

that when an

organization

caters to

a fixed set of customers with stable

preferences,

a

market orientation

is

likely

to have

little

effect on

per-

formance

because little

adjustment

o a

marketing

mix

is

necessary

to

cater

effectively

to

stable

preferences

of

a

given

set

of

customers. In

contrast,

if

the

cus-

tomer sets

or

their

preferences

are less

stable,

there

is

a

greater

likelihood

that the

company's

offerings

will

become

mismatched

with

customers'

needs over

a

pe-

riod

of

time. An

organization

therefore

must

ascertain

the

changed preferences

of

customers

and

adjust

its

offerings

to

match

them.

That is:

P16:

The greater the market turbulence, the stronger the

relationship

etweena

market

orientation

nd

busi-

ness

performance.

Several

authors

(e.g.,

Bennett

and

Cooper

1981;

Houston

1986;

Kaldor

1971;

Tauber

1974)

point

out

that

many

generic

product

class

innovations

do

not

evolve from

consumer

research.

Rather,

these

inno-

vations

are

developed

by

R&D

personnel

who

are

often

outside

the

industries

into

which

the

innovations

even-

tually

assimilate.

Similar

notions

emerged

in

the in-

terviews.

As

two of

the

managers

interviewed indi-

cated:

[It

is

important

o]

recognize

that

new

products

do

not

always

originate

rom

he

customer,

particularly]

in

high-tech

ndustry.

An

organization

eeds]

o

bal-

ance

R&D

[initiated]

projects

as well as

customer/

market

driven

products.

-Sales

manager,

ndustrial

roducts

ompany

Let

me

explain

why

we are

not

marketing

riented.

We are a complexbusiness,theindustrys changing

dramatically.

ome of

our

products

idnot

exist three

years

ago.

The

technology

s

changing.Everyone

s

getting

wrappedup

in

production/operations.

-Marketing manager,

ervice

organization

The

basic

idea

expressed

in

the

quotations

is

that

in

industries

characterized

by

rapidly

changing

tech-

nology

(note

that

firms in

such

industries

often

sell to

other

firms),

a

market

orientation

may

not be as im-

portant

as

it is

in

technologically

stable

industries.

Technology

here

refers to the

entire

process

of

transforming inputs

to

output

and the

delivery

of

those

outputs

to the

end

customer.

The

proposition

is

not

that a market orientation is unimportant in technolog-

ically

turbulent

industries,

but

rather

that it is

less im-

portant.

That is:

P17:

The

greater

the

technological

turbulence,

the

weaker

the

relationship

between a

market

orientation

and

business

performance.

Several

executives

noted

that

the

degree

of

com-

petition

in

an

industry

has

a

straightforward

bearing

on

the

importance

of

a

market

orientation.

Strong

competition

leads to

multiple

choices

for

customers.

Consequently,

an

organization

must

monitor

and

re-

spond

to

customers'

changing

needs

and

preferences

to ensure that customers select its

offerings

over com-

peting

alternatives. As

two

executives

indicated:

Historically,

[we]

were a

technically

driven

com-

pany.

In

the

early

years

t

was a

successful

approach.

If we

had a

better

mousetrap,

ustomers

would

search

[us]

out.

However,

as

more

companies

ame

up

with

more

solutions,

we

had to

become

more

market

ri-

ented.

Find out

what

solution

the]

customer

s

look-

ing

for,

and

try

to

solve

it. In

the

past

ittletime

was

spent

with

customers.

Now

coordinate

with

cus-

tomer,

solutionfor

him,

try

to

utilize

that

develop-

ment

energy

to

provide

solution

or

segment.

-Sales

manager,

ndustrial

roduct

irm

One

thing

is

that

marketing

nd

advertising

hange

so much.Whatworked ast yearmaynot workthis

year.

A

lotof it

has

to

do

with

the

competitive

ature

that

you're

in at

the

time

because

people's

needs

change.

...

If

you

don't

have

competition,

you

don't

need

it as

much.

-Marketing

director,

ervice

organization

Thus,

an

organization

with

a

monopoly

in

a

market

may perform

well

regardless

of

whether or

not

it

mod-

ifies

its

offerings

to

suit

changing

customer

prefer-

ences

(see

also

Houston

1986,

p.

84).

As

one

service

executive

noted,

If

one

has

a

patent

or

lock

on

the

14 / Journalof

Marketing, pril

1990







product,

it

may

not be efficient

to allocate

resources

to

marketing.

In other

words,

the benefits

afforded

by

a

market

orientation

are

greater

for

organizations

in

a

competitive

industry

than

for

organizations op-

erating

in less

competitive

industries.

P18:

The

greater

the

competition,

the

stronger

the

rela-

tionship

between

a

marketorientation

nd

business

performance.

Several executives indicatedthat in strongecon-

omies

characterized

by

strong

demand,

an

organiza-

tion

may

be able

to

get

away

with

a

minimal

amount

of

market

orientation. In

contrast,

in

a weak

econ-

omy,

customers are

likely

to be

very

value

conscious

and

organizations

mustbe more

in tune

with

and

re-

sponsive

o customer

needs

in

order o offer

good

value

for

money.

Paradoxically,

marketing

eems

to

require

more

resources

precisely

at

times

when

the

organi-

zation is

short of

resources

because

of

weak

business

conditions.

As one academician

noted:

I

think n

weak

economies,

on

the one hand

[there

s

a] need to be moremarketingriented because] on-

sumers

might

need better

nducements,

heir

dollar

has

to

go

farther.

On the other

hand,

to be

marketing

oriented

equires reater

mounts

f

money

that

hey

may

not be able

to

provide

at

that

point.

The

preceding

observations

suggest

the

following

proposition.

Plg:

The

weaker he

general

conomy,

the

stronger

he re-

lationship

betweena

market

rientation nd

business

performance.

Our

19

research

propositions

fit

the broad

frame-

work

depicted

in

Figure

1.

Note

that

the

moderator

variables

discussed

are

labeled

supply-side

and

de-

mand-side

moderators.

The latter

relate

to

the

nature

of

demand n

an

industry e.g.,

customer

preferences,

value

consciousness)

whereas

the

former

refer

to

the

nature

of

competition

among

suppliers

and

the

tech-

nology

they

employ.

The

framework n

Figure

1

fa-

cilitates

parsimonious

conceptualization

and,

more

importantly,

offers

the

potential

for

extending

re-

search

by

identifying

additional

constructs

that

may

fit into

each of

the

broad

categories

(senior

manage-

ment

factors,

interdepartmental

ynamics,

etc.).

ManagerialImplications

Our

propositions

have

direct

managerial

mplications.

First,

our

research

suggests

that

a

market

orientation

may

or

may

not

be

very

desirable

for a

business,

de-

pending

on

the

natureof

its

supply-

and

demand-side

factors.

Second,

the

research

clearly

delineates

the

factors

that

can

be

expected

to

foster or

discourage

a

market

orientation.

These

factors

are

largely

control-

lable

by

managers

nd

therefore

an

be

altered

by

them

to

improve

the

market

orientation

of

their

organiza-

tions.

Overall,

our

research

gives

managers

a

com-

prehensive

view

of

what

a

market

orientation

s,

ways

to

attain

it,

and

its

likely

consequences.

To Be

or

Not

To

Be

Market

Oriented

Our

study

suggests

that

though

a

market

orientation

is

likely

to be

related

to

business

performance

n

gen-

eral,

under

certain

conditions it

may

not

be

critical.

A

market

orientation

requires

the

commitment

of

re-

sources. The orientation s useful

only

if the benefits

it

affords

exceed the

cost

of

those

resources.

Hence,

under

conditions

of

limited

competition,

stable

market

preferences,

technologically

turbulent

industries,

and

booming

economies,

a

market

orientation

may

not

be

related

strongly

o

business

performance.

Managers

of

businesses

operating

under

hese

conditions

hould

pay

close

attention

to

the

cost-benefit

ratio

of a

market

orientation.

Implementing

a

Market

Orientation

Our

research

provides

very

specific

suggestions

about

the factors that foster or discourage a market orien-

tation

in

organizations.

Because

the

factors

identified

are

controllable

by

senior

managers,

deliberate

en-

gendering

of

a

market

orientation

is

possible.

For

example,

our

findings

suggest

that

senior

managers

must

themselves

be

convinced

of

the

value

of

a

market

orientation

and

communicate

their

com-

mitment

to

junior

employees.

Though

annual

reports

and

public

interviews

proclaiming

a

market

orienta-

tion

are

helpful, junior

employees

need

to

witness

be-

haviors

and

resource

allocations

that

reflect a

com-

mitment to

a

market

orientation.

Senior

managers

must

develop positive attitudes toward change and a will-

ingness

to

take

calculated

risks.

A

market

orientation

is

almost

certain to

lead

to

a

few

projects

or

programs

that

do

not

succeed.

However,

supportive

reaction to

failures

is

critical

for

engendering

a

change-oriented

philosophy

represented

by

the

marketing

concept.

We

also

identify

interdepartmental

dynamics

that

can

be

managed

through

appropriate

in-house

efforts.

Interdepartmental

variables-conflict,

connected-

ness-clearly

have a

key

role in

influencing

the

dis-

semination

of

and

responsiveness

to

market

intelli-

gence.

Some

inexpensive

ways

to

manage

these

two

antecedents

(conflict,

connectedness)

include

(1)

in-

terdepartmental lunches,

(2)

sports

leagues

that

re-

quire

mixed-department

eams,

and

(3)

newsletters

hat

poke

un

at

various

nterdepartmental

elations.

More

advanced

efforts

include

(1)

exchange

of

employees

across

departments, 2)

cross-department

rainingpro-

grams,

and

(3)

senior

department

managers

spending

a

day

with

executives

in

other

departments.

Such

ef-

forts

appear

to

foster

an

understanding

of

the

person-

alities of

managers

in

other

departments,

their

culture,

and

their

particular

perspectives.

Market

Orientation

15







The third

etof variables hatsenior

managersmight

alter

to foster

a market orientation

pertains

to

orga-

nizationwide

systems.

The

impact

of structural

actors

such

as formalization

and centralization

s unclear

be-

cause,

thoughthey appear

o inhibit

he

generation

nd

dissemination

of market

intelligence,

these

very

fac-

tors are

likely

to

help

an

organization

mplement

its

response

to market

intelligence effectively.

How

an

organization

hould

structure tself

appears

o

depend

on the

activity

involved.

Clearly,

however, senior

managers

can

help

foster a market orientation

by

changing

reward

systems

from

being completely

fi-

nance

based

(e.g.,

sales,

profits)

o

being

at least

partly

marketbased

(e.g.,

customer

satisfaction,

ntelligence

obtained).

Simultaneously,

nformalnorms

such as

the

acceptability

of

political

behavior in the

organization

should be

changed

to facilitate concerted

response

by

the

departments

o market

developments.

The

Pace

and

Dynamics

of

Change

A

change

in

orientation akes

place

slowly.

We

were

apprisedof certainorganizations hatwereactivelyin-

volved in

becoming

more

market

oriented,

but

planned

to

complete

the

change

process

over

a

period

of

about

four

years.

In

describing

a

change

to a

market

ocus,

an

executive

directornoted that there

s

always

a

pull

and

tug

between a new

idea and

old

ways

of

doing

things.

It

appears

especially

difficult to

carry

m-

ployees

who

are concerned hat a

movement

along

the

market

orientation

dimension

might

jeopardize

their

power

in

the

organization

or

expose

other

inadequa-

cies

related to their

jobs.

Further,

he

balance of

power

across

departments

must

be managedcarefully in any effort to become

more

market

oriented.

Though

a

market

orientation

involves

the

efforts of

virtually

all

departments

n

an

organization,

the

marketingdepartment

ypically

has

a

larger

role

by

virtue of

its

contact with

customers

and

the

market.

Individuals n

marketing

departments

may

try

to

relegate

other

departments

o a

secondary

status.

One health

care

administrator

ecounted

that

when

the

organization

had

begun

to

emphasize

a

mar-

ket

philosophy,

it had

started

reating

marketing

per-

sonnel

as

the

blue-eyed

boys

of

the

organization.

Within a

very

short

time,

personnel

in

other

depart-

ments

began

to

resent

this

treatmentand

raised

ques-

tions with the chief executive ( Whatare you

doing

for

us? ).

For

any

change

to

take

place,

an

organization

irst

must

perceive

a

gap

between its

current

and

its

pre-

ferred

orientation.

We

were

apprised

of

several

in-

stances in

which

membersof

an

organization

elt

they

were

very

customer

oriented,

but

in

fact

were

hardly

so.

An

executive

narrated

he

example

of

a

service

organization's

employees

who

felt

they

were

very

re-

sponsive

to

customer

needs.

However,

when the in-

teractions of

these

employees

with

customers

(hos-

pital

patients)

were

videotaped

and

played

back to the

employees, they

were

horrifiedat the

callous

manner

in

which

they

saw

themselves

treating

customers.As

Weick

(1979)

notes,

it is the

perceptions

of situations

that are the

triggers

of

action.

The

Quality

of

Market

Orientation

Though

in

general

organizations

hat

develop

market

intelligence

and

respond

o it are

ikely

to

perform

etter

and have more

satisfied

customersand

employees

than

ones

that do

not,

simply engaging

in

market-oriented

activities

does not

ensure the

quality

of those

activi-

ties. The

quality

of

market

ntelligence

itself

may

be

suspect

or the

quality

of

execution

of

marketingpro-

grams

designed

in

response

to the

intelligence may

be

poor.

In

such

instances,

a market

orientation

may

not

produce

the

desired

functional

consequences.

For ex-

ample,

to

meet a customer's

needs,

one

industrial

productscompany

went

to extreme

engths

to

custom-

ize small batchesof products or the customer,which

resulted n

poor

financial

performance.Similarly,

one

executive noted

that a

company's

efforts

may

so

raise

customer

expectations

about

product

quality,

response

time,

and

other factors

as to result in either

uneco-

nomical

operations

or dissatisfied

customers.This

dif-

ficulty

parallels

the

problem

posed

by

overpromising

in service

settings

discussed

by

Zeithaml,

Berry,

and

Parasuraman

1988).

Though

we do not

address

the

issue

of variations in

the

quality

of

market intelli-

gence,

its

dissemination,

and

organizational

esponse,

these variations

clearly

are

important

nd

warrant

on-

siderationby both managersand researchers.

Conclusion

We

attempt

to

clarify

the

domain of

the marketori-

entation

constructand

provide

a

working

definition

and a foundation

or

developing

a

measureof the

con-

struct.

Additionally,

we

identify

three

classes

of fac-

tors

affecting

a

market

orientation

and

interrelation-

ships among

the

elements of

market

orientation.We

highlight

the

impact

of

a

market

orientation

on an

or-

ganization's

strategy,employee

dispositions,

and

cus-

tomer

attitudes and

behavior.

Finally,

and in

a

sig-

nificant

departure

rom

previous

work,

we introduce

supply-

and

demand-side

factors

as

potential

moder-

ators

of

the

impact

of

market

orientationon

business

performance.

Our

propositional

nventory

and

integrative

rame-

work

represent

efforts

to

build

a

foundationfor

the

systematic

development

of

a

theory

of

market

orien-

tation.

However,

the

objective

of

our

research

s

the-

ory

construction

ather

han

theory

testing.

Much

work

16 / Journalof

Marketing,April

1990







remains

to be done

in terms

of

developing

a

suitable

measure

of market

orientation

and

empirically testing

our

propositions.

In

recent

years,

considerable

interest

has

focused

on

organizational

resources

and

positions

that

repre-

sent sustainable

competitive advantages (e.g., Day

and

Wensley 1988).

Much

less

attention

has

focused

on

organizational

processes,

such

as

market

orientation,

that

represent

a

long-term

advantage.

Because a

mar-

ket

orientation

is

not

easily

engendered,

it

may

be

considered

an

additional

and

distinct

form

of

sustain-

able

competitive

advantage.

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